Where Does the Taxachusetts Label Come From?

January 16, 2017

Where-Does-the-Taxachusetts-Label-Come-From?

Overall, the level of taxation in Massachusetts is near the
middle of
the pack when compared to the rest of the country. Total state and
local taxes paid in Massachusetts as a share of total personal income
was 10.4 percent in FY 2014 (the most recent year for which national
data is available). That places Massachusetts 20th
among the states and at the U.S. average of 10.4 percent (see chart
below).1
Taxes, of course, are the primary way that
the people of a state fund education, transportation, public safety,
safety net protections, and other public services. With taxes in
Massachusetts at the US average and in the middle of the pack among
states, why do we sometimes hear the name "Taxachusetts" applied to our
state? The answer has to do with history rather than current
reality.

The Taxachusetts label is a legacy of the 1970s - and at that
time the
label had a basis in reality. In FY 1977, Massachusetts was a
relatively high-tax state, as the chart below shows. In fact,
taxes as a share of income were higher in Massachusetts at that point
than in all but two other states.

Since the late 1970s, tax policy in the Commonwealth has
changed
dramatically. The approval of Proposition 2 1/2 in 1980
reduced property taxes, and then, particularly in the late 1990s, the
Commonwealth reduced state taxes—primarily the income
tax—significantly.2
As a result, between
1977 and 2014, Massachusetts reduced taxes more than all but one other
state, as the following figure shows.